Student Loans in the UK: What You Need to Know Before You Borrow
Published 5th of May 2011·Updated 23 April 2026
Reviewed by: Reviewed for accuracy April 2026
UK student loans are government-funded borrowing available to eligible higher education students in England, Wales, Scotland and Northern Ireland. They cover tuition fees and living costs, and you only repay once you earn above a set income threshold. Any balance still outstanding after 40 years (for students who started in England from 2023 onwards) is written off automatically.
Short Summary
There are two types of student loan: a tuition fee loan, paid directly to your university, and a maintenance loan, paid into your bank account to help with living costs.
Repayments are collected automatically through the PAYE system, like tax. You will never need to set up a direct debit or contact the Student Loans Company yourself.
The repayment threshold and write-off period depend on which repayment plan you are on. Plan 5 (for English students starting from 2023) has a write-off period of 40 years. Plan 2 (for students who started from 2012 to 2022) writes off after 30 years.
Interest is charged from the day your first payment is made. For Plan 5, interest is set at the Retail Price Index (RPI) rate. Your current balance is shown on your Student Loans Company online account.
How does the Student Loans Company work?
The Student Loans Company (SLC) administers all student loans and grants on behalf of the UK government. You apply through Student Finance England, Student Finance Wales, Student Awards Agency Scotland or Student Finance NI depending on where you live. The SLC assesses your eligibility and pays the relevant amounts to your university and your bank account.
The SLC sends an annual statement showing your outstanding balance and any interest charged. You can also check your balance at any time through your online SLC account.
What are the two types of student loan?
There are two separate loans: the tuition fee loan and the maintenance loan.
The tuition fee loan covers the cost of your course, up to the maximum fee set by your university. In England, universities can charge up to £9,250 per year (as of the 2025-26 academic year). The money goes directly to the university; you never handle it.
The maintenance loan helps with day-to-day living costs including rent, food and travel. The amount you receive depends on where you study, whether you live at home or away, and your household income. In England for 2025-26, the maximum maintenance loan is around £13,348 per year for students living away from home and studying in London.
When do student loan repayments start?
Repayments begin in the April after you graduate or leave your course, once your income exceeds the repayment threshold. The threshold depends on your repayment plan.
| Repayment plan | Who it applies to | Repayment threshold (2025-26) | Write-off period |
|---|---|---|---|
| Plan 1 | Scottish and NI students (pre-2012 English/Welsh) | £24,990 per year | Age 65 or 30 years |
| Plan 2 | English/Welsh students starting 2012-2022 | £27,295 per year | 30 years |
| Plan 4 | Scottish students (from 2021) | £31,395 per year | 30 years |
| Plan 5 | English students starting from 2023 | £25,000 per year | 40 years |
| Postgraduate Loan | Postgraduate students in England/Wales | £21,000 per year | 30 years |
You repay 9 per cent of everything you earn above the threshold (Plan 1, 2, 4 and 5). So on Plan 2, if you earn £30,000, you repay 9 per cent of the £2,705 above the threshold, which is roughly £243 per year or about £20 per month.
Will I ever repay my student loan in full?
Many graduates will not. The Institute for Fiscal Studies estimates that around 70 per cent of current Plan 2 graduates will never fully repay their loan before the 30-year write-off date. Whether this is a problem depends on your perspective: if the loan is written off, you never pay the outstanding balance, but you will have paid 9 per cent of income above the threshold throughout your working life.
The key point is that a student loan does not work like a commercial loan. Missing the write-off date is not a failure; it is how the system is designed.
Does a student loan affect your credit score?
No. Student loans from the Student Loans Company do not appear on your credit file with Experian, Equifax or TransUnion. They will not affect your credit score or your ability to get a mortgage. However, mortgage lenders will ask about student loan repayments when assessing affordability, because those repayments reduce your monthly take-home pay. A typical £27,000 student loan balance does not prevent mortgage approval, but lenders such as Halifax and Nationwide will factor the monthly repayment into their affordability calculations.
What happens if you go abroad or stop working?
If you move abroad, you are still required to make repayments if your income exceeds the equivalent threshold in your new country. The SLC will convert the threshold into the local currency. If you stop working or your income falls below the threshold, repayments stop automatically and resume when your income rises again. You will not be penalised for periods of low or no income.
FAQ
Can I pay off my student loan early?
Yes, you can make voluntary overpayments at any time. However, for most graduates this is not financially beneficial. Because the loan is written off after the plan's repayment period, overpaying reduces your balance but does not reduce how long you repay or your monthly deductions. The IFS advises that only the highest-earning graduates are likely to benefit from overpaying.
Is a student loan counted as debt on a mortgage application?
Student loans do not appear on your credit file and are not counted as a liability in the traditional sense. However, the monthly repayment reduces your net take-home pay, and lenders use your net income when calculating what you can afford to borrow. For most applicants, the impact on borrowing capacity is modest.
What is the interest rate on a UK student loan?
Interest depends on your plan. Plan 5 (for English students from 2023) charges interest at the RPI rate only, meaning the loan grows with inflation but not above it. Plan 2 charged RPI plus up to 3 per cent depending on income, which led to rapid balance growth. Check your current plan and rate on the Student Loans Company website or your annual statement.
Do I repay my student loan if I drop out?
Yes, but only on the portion already received. If you drop out partway through your first year, you repay only the tuition fee and maintenance loan amounts paid out up to that point. Repayments still only begin once you earn above the threshold, in the same way as for graduates.
What is a maintenance grant and can I get one?
Maintenance grants were abolished for English students starting from 2016. Students from lower-income households now receive a higher maintenance loan instead, which must be repaid. Welsh and Scottish students may still qualify for non-repayable grants; check with Student Finance Wales or the Student Awards Agency Scotland for current entitlements.